Markdown tables not rendered as tables in Claude Code VS Code extension's Terminal mode (renders correctly in Native UI mode)

Description

The Claude Code VS Code extension offers two ways to start a session: Terminal mode and Native UI mode. In Terminal mode, Markdown tables in model responses are not rendered as tables. Each row is flattened into a sequence of <column header>: <cell value> lines (one line per cell), and rows are separated by horizontal rules. The two-dimensional column layout is lost.

In Native UI mode, the same response renders the table correctly with proper columns.

Steps to reproduce

1. Open VS Code with the Claude Code extension installed.
2. Start a new session in Terminal mode and ask a question whose answer contains a Markdown table → table is flattened into per-cell header: value lines.
3. Start a new session in Native UI mode in the same window, ask a similar question → table renders correctly.

Environment

• Claude Code: 2.1.140
• VS Code: 1.120.0 (commit 0958016b2af9f09bb4257e0df4a95e2f90590f9f, arm64)
• macOS 14.6 (23G80), Apple M3 Max, 36 GB

Screenshots

• Screenshot 1 — Terminal mode, table flattened

<img width="1062" height="617" alt="Image" src="https://github.com/user-attachments/assets/5aebdaff-aad4-4237-8b14-a3f5a9f0dd5f" />

• Screenshot 2 — Native UI mode, table rendered correctly

<img width="1095" height="841" alt="Image" src="https://github.com/user-attachments/assets/d351064a-3c4f-47e6-ab63-ab320ea17dbb" />